Republican attempts to deal with the crisis
One of the two major American political parties. Republicans tend to hold a more conservative viewpoint on politics and society. presidents had been in charge of the USA since 1921. Their policies of not interfering in business had helped the US economy to grow. However, these policies did not help Republican president Herbert Hoover, who had only become president at the beginning of 1929, to deal with the problems of the Great Depression.
Laissez faire and rugged individualism
Herbert Hoover had become president in 1929 after promising to bring prosperity to everyone in America with the slogan 鈥渁 chicken for every pot鈥. However, Hoover thought that it was the job of charities to look after the poor, not the job of the government. He also followed the policy of When a government doesn't believe in interfering in the lives of individuals and businesses. For the Republicans, liberty or freedom to live your life and run your business was one of the most important roles of government. which said that the government should not interfere in what businesses were doing. He also believed in Personal liberty and free competition, and the idea that people should be self-reliant. which was the idea that people should sort out their own problems. Hoover himself had become a millionaire by working as a mining engineer and business man before becoming president.
No US government ever before had to deal with an economic problem as big as the Great Depression. To begin with, Hoover鈥檚 policies were not very effective. Eventually, Hoover did try to take actions he thought would help people. However, very little of what he tried had any effect before the 1932 presidential election.
1929 Agricultural Marketing Act
Hoover鈥檚 Agricultural Marketing Act set up the Federal Farm Board in 1929. It was intended to help keep prices for farm produce high by buying up anything farmers could not sell at market. It was not very effective as it encouraged farmers to continue to overproduce. As a result, the price of farm produce continued to fall.
Hawley-Smoot Tariff Act
The Hawley-Smoot Tariff Act, passed in March 1930, set a A tax or charge placed on imported or exported goods and services. on goods imported into the USA from other countries. It was intended to make foreign goods more expensive than American-made ones. Other countries responded by taxing American goods on sale in their countries. This made it more difficult for American companies to make money.
1932 Emergency Relief Act (ERA)
The Emergency Relief Act, passed in July 1932, gave US states a total of approximately $300 million in loans to help support the unemployed. However, few states took advantage of this as they were worried about getting into debt that they might struggle to pay back in the future.
Relief agencies
Hoover set up the President鈥檚 Emergency Committee for Employment (PECE) in October 1930. This aimed to support state programmes for assisting the unemployed and help businesses to employ more people. It was not very effective, however, as there was no government money available to help as Hoover was reluctant to raise taxes to pay for it. The PECE was replaced in 1931 with the President鈥檚 Organisation on Unemployment Relief (POUR), which helped charities to raise more money to help the poor. However, this was nowhere near enough to meet the increasing demand for their services.
Financial aid
Hoover realised that the US government was going to have to provide some financial aid to people who were struggling. It was hoped that this would allow them to start spending money again.
Some of Hoover鈥檚 actions made the financial situation worse. When he restricted the supply of bank notes to stop the value of money held by banks from falling, people had less money to spend. When he increased interest rates to make borrowing more expensive, it became more difficult for companies to get loans to help them through the worst of the Great Depression.
Tax cuts
In October 1929, Hoover had asked The legislative body of the US government, made up of the Senate and the House of Representatives. for a $160 million cut in income taxes. He had believed that lower taxes would help struggling businesses to make more money. However, this left the US government with less money to use to deal with the crisis. In December 1930 Hoover reversed this tax cut. The 1932 Revenue Act raised taxes for everyone, increasing the top level of income tax from 25 per cent to 63 per cent.
Money for banks and house buying
Eventually Hoover realised that he needed to give financial support to banks and other institutions so people could access money and begin spending again.
The Reconstruction Finance Corporation Act was passed and signed into law on 22 January 1932, creating the Reconstruction Finance Corporation (RFC). This allowed banks to provide $2 billion of government money in emergency loans to help struggling banks and insurance companies, as well as businesses and railroads that were in danger of going A legal status where a person or organisation is ruled to be unable to pay their debts. By the time of the 1932 presidential election, the RFC had started to make a difference. It was an idea that was continued by President Franklin D Roosevelt鈥檚 New Deal.
The Federal Home Loan Bank Act, passed in July 1932, set up 12 banks across the USA. These would provide loans to enable construction companies to build houses, as well as A mortgage is a type of loan. It is usually a large amount of money used to pay for a property. for people who wanted to buy houses.